Understanding Contingency Fees

Most disability lawyers charge a contingency fee, which means you don’t have to pay them upfront. Instead, the lawyer receives a percentage of the back pay (the lump sum of benefits owed to you for the period between when you became disabled and when your claim is approved). This arrangement is beneficial for those who may not have the financial resources to pay for a lawyer out of pocket.

• No Win, No Fee: You don’t pay your lawyer unless you win your case and receive back pay.
• Percentage of Back Pay: The lawyer’s fee is based on the amount of back pay you are awarded. This can include retroactive benefits from when your disability started up until your claim was approved.

Maximum Fee a Disability Lawyer Can Charge

While it may seem like disability lawyers can charge whatever they want, the Social Security Administration (SSA) has set limits to protect claimants from excessive fees.

• 25% of Your Back Pay: The most a disability lawyer can charge is 25% of your back pay (retroactive benefits), up to a maximum of $6,000.
• For example, if your back pay is $40,000, your lawyer can take 25%, which would be $10,000. However, due to the fee cap, your lawyer can only charge $6,000.
• If your back pay is lower, say $15,000, the lawyer would take 25%, or $3,750.
• Fee Limits for Appeals: If your case goes to the appeals stage (such as a hearing before an Administrative Law Judge), the same fee limits apply. The lawyer can still only charge up to 25% of the back pay, with the $6,000 cap.

Additional Costs and Expenses

While the 25% fee is the lawyer’s primary compensation, there may be additional costs and expenses related to your case. These costs are separate from the lawyer’s fee and could include things like:

• Medical Records: You may need to pay for copies of medical records, doctor’s reports, and other documentation.
• Expert Testimony: If an expert (such as a medical expert) is needed to support your case, their fees may be added to the overall cost.
• Administrative Fees: Costs for postage, copying, and filing may also apply.

It’s important to discuss these potential expenses upfront with your lawyer to ensure there are no surprises.

Payment of Legal Fees

Disability lawyers typically handle their fees in the following way:

• Fee Deduction from Back Pay: When you win your case and are awarded back pay, the SSA will pay the back pay to both you and your lawyer. The lawyer’s fee will be deducted directly from the back pay.
• For example, if your award is $30,000 in back pay, and your lawyer’s fee is $6,000, the SSA will send you $24,000 and $6,000 to your lawyer.
• Ongoing Benefits: After the lump sum payment, the lawyer does not receive any portion of your ongoing monthly benefits. Once the back pay is settled, your lawyer’s role in your case is complete.

What If You Lose the Case?

If you lose your case, you generally do not owe your lawyer any fees. This is the benefit of a contingency fee arrangement — you only pay for legal services if you win your case.

• No Payment for Denied Claims: If your claim is denied and you do not receive back pay, you do not owe the lawyer any fees. However, if you choose to proceed with an appeal, the same fee structure applies once your claim is approved.

Can the Lawyer Charge More Than 25%?

In rare cases, a disability lawyer may request approval from the SSA to charge a higher fee. This usually happens when the case is exceptionally complex or requires extensive legal work, such as appeals, hearings, or additional evidence gathering.

• SSA Approval: The SSA must approve any fee above the standard 25%. The lawyer would need to submit a request and provide a justification for why the higher fee is necessary.